Employee expense reimbursement can be a headache for HR, especially when personal vehicles are involved. The recent Parker v. Battle Creek Pizza Inc. case further complicates matters, leaving HR professionals wondering how to ensure FLSA compliance without clear reimbursement calculation guidance.
Key Takeaways from FLSA & the Case
FLSA doesn't require reimbursement, BUT nonexempt employee pay cannot fall below minimum wage after deducting unreimbursed business expenses.
The Sixth Circuit offered no simple calculation method, especially for vehicle use. This creates challenges for HR in affected jurisdictions.
Action Steps for HR
Hybrid Reimbursement: Start with a base rate (consider the IRS mileage rate), but allow employees to submit actual expenses if they exceed this amount.
Regular Audits: Review your reimbursement system frequently to ensure fairness and alignment with evolving legal landscapes.
Educate Employees: Empower employees to track and report expenses accurately and understand the reimbursement process.
What to Avoid
Ignoring State/Local Laws: These may have stricter reimbursement requirements than the FLSA.
Rigid Policies: Avoid "one-size-fits-all" – tailor your approach when possible.
Procrastination: Update your policies now to reflect the Sixth Circuit decision and minimize risks.
Parker v. Battle Creek – What it Means
This case challenged two common delivery driver reimbursement models (flat per-mile, flat per-delivery) as potential FLSA violations. The court's indecision underscores the need for HR to be proactive and adaptable.
Though the Sixth Circuit ruling creates uncertainty, HR can lead by developing reimbursement policies that prioritize fairness, transparency, and continuous monitoring of legal changes.
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